Robert Peston is quite right to draw attention to this chart from the Bank of England's December 2010 Financial Stability Review. It shows that the big UK banks are receviing public subsidies worth about £100bn. This represents about 2.5% of their capital. At their average leverage ratio of 20, this means the taxpayers are supporting a staggering £3 trillion of lending.

Peston rightly argues that the banks do not have a viable business without our subsidy. The £100bn is entirely made up of cheap capital - we are giving them access to cash at much lower rates than the markets would ever offer.

This other chart from the same publication shows how appreciative the lucky shareholders of banks should be. The big banks are returning to their pre-crisis return on equity levels of 15%. As I have argued and as Martin Wolf has documented, the measure of how far financial reform is working ought to be the degree to which banks' equity returns come to be equal, on average, to equity returns in other industries. At the 10% and 15% levels forecast for next year and the year after, it is clear that they are heading back for their three-fold advantage over other industries. This is not only unfair. It is bad for the fabric of our economy.

So why are we keeping alive the organisations that proved themselves so disfunctional these past 10 years and who seem to be returning at great speed to their pre-crisis configuration? The argument for not letting banks go under is always some form of the contagion argument: say we pulled the plug on Barclays; other banks who have themselves lent to Barclays but that are perfectly good would suddenly appear risky; panic withdrawals of deposits from those banks would cause good institutions to go under, and so on, in a chain reaction.

It is true that we want to avoid panic and avoid destroying good institutions. But it is not clear where those good banks are - I would be surprised if there is a single one in the Atlantic sphere that would today survive without subsidy. As for panic: we have the time to explain what a resolution to the crisis might be and to stop the kind of damaging blind panic that would have taken hold of the world economy had this happened in 2008. Japan's lost decade of growth teaches us that a rotten banking system surviving on public subsidy will stifle an economy indefinitely. Moreover, the strong growth in the BRICS  (Brazil (Russia, hmm) India China South Africa) should give us confidence that there are real opportunities for growth in the world economy that healthy banks could be helping to finance.

Peston, Clegg and Cameron all think that the opportunity here is to be tough on bonuses. I think the opportunity goes much further than this. What we can do is to have a wholesale, calm and coordinated reorganisation of the banks. In practice, we should be using our power, together with the power that other taxpayers have in Europe and America, to say:

All banks receiving public subsidy must now go into a special resolution regime - effectively, they should become charges of the state. We will separate out their good and bad loans. A number of banks will eventually be privatised with a good loan portfolio and the proceeds will go to the taxpayer. In exchange, the taxpayer will manage the bad loans that were taken out by our careless agents (the banks). That management may well imply renegotiation of debts.

This will be good for our economies; good for the new banks; and good for growth in the emerging economies.